Publication Date

2019

Abstract

For a property scholar, the most intriguing part of Eric Posner and Glen Weyl’s Radical Markets is its proposal for a self-assessed system of property rights. Their “common ownership self-assessed tax” (COST) would place everyone’s belongings perpetually on the block at prices that the owners themselves choose (and must pay taxes on).1 The idea of making self-assessed valuation the basis of both taxation and involuntary dispossession is not new; such mechanisms have been discussed by scholars for many decades 2 But the Posner and Weyl proposal is unique in its breadth and in the boldness of the challenge it poses to traditional understandings of property.

In the real property context, which I will focus on here, the appeal of the COST approach and its insurmountable sticking point both come down to complementarities—or more colloquially, attachments.3 COST promises to unlock the value currently lost when complementary entitlements (adjacent parcels of land, say) cannot be successfully assembled due to holdout problems. Posner and Weyl’s proposal is also sensitive to complementarities between different pieces of property owned by the same person.4 But there are other complementarities that COST ignores or disrupts. These include not just the attachments that people form with their properties over time, but also those that exist among separately owned properties that are located near each other. A homeowner’s valuation of her home, for example, is deeply contingent on whether the residence next door will remain standing or will be replaced with a factory.

As I will explain, these neglected complementarities make COST unworkable as presently conceived. Nonetheless, Posner and Weyl advance property theory by spotlighting a contradiction at the heart of ownership—its capacity to both encourage and impede efficient activity. Finding the best way to manage this tension is an increasingly pressing project, and Posner and Weyl’s work provides a timely catalyst.


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